Forex: Power Indicator
Technical Indicator Index Force (Force Index, FRC) was developed by Alexander Elder and measures the strength of bulls for each increase, and the bears at every decline. It connects the basic elements of market information: price trend, its drops, and the volume of transactions. This index can be used in pure form, but it is better to smooth out using a moving average.
It represents a positive or negative number, which collectively represented such significant exchange rates, as the direction of price movement, variations in its oscillation and the size of deals in the market at a given position. The size of the display of force impact, first and foremost, raising or lowering prices, then the absolute amount of increase or decrease, and the total volume of transactions.
Power indicator is normally used to determine the correct time of closing and opening positions. It is generally accepted that the most opportune moment to buy is the time during an ongoing uptrend force index is negative. And vice versa - if the ongoing downward trend, and force index turned positive - need to sell.
Another important detail that can predict the dynamics (or rather, the lack thereof) Strength Indicator - if the price has changed, and the force index remained unchanged, it is likely, it signals the imminent reversal trend.
In all other cases, force index indicates, in fact, corresponding to its name, the power of bulls during periods of price increases and the strength of bears in the period of its slide. In other words, more force index is intended to predict how long will this or that tendency, and whether it will continue at all.
The force of every market movement is its focus, scope and volume. If the closing price of the current bar is higher than the previous one, the force is positive. If the current closing price is lower than the previous one, the force is negative. The greater the difference in prices, the greater the force. The greater the volume of transactions, the greater the force.
